‘People starting to turn to babash’ – Dhanpaul questions benefits of higher alcohol duties

PNM Senator Vishnu Dhanpaul contributes to debate at the Senate on October 27. - File photo by Angelo Marcelle

OPPOSITION Senator Vishnu Dhanpaul and Independent Senator Anthony Vieira, SC, questioned what benefits could be obtained from higher duties on alcohol and tobacco which were proposed in the 2025/2026 budget.

They raised these questions during their respective contributions to a debate on five motions before the Senate on October, to approve orders to implement these duties.

Dhanpaul recalled Finance Minister Davendranath Tancoo estimating government could receive revenues of approximately $800 million from these duties, when he presented the budget in the House of Representatives on October 17.

He questioned whether government would achieve these revenues.

Dhanpaul said, "The budget did not address the potential structural leakages from a lack of compliance.

Referring to the earlier contribution by Minister in the Ministry of Finance Kennedy Swaratsingh in opening the debate, Dhanpaul said no clear link was made between the higher duties and health benefits to citizens in the budget.

He recalled governments had a habit of implementing sin taxes in order to raise revenues.

"The strategy minimises the public backlash by framing it as primarily targeting harmful products."

While noting these duties could provide revenue for government, Dhanpaul said, "Historical data shows that when alcohol taxes were increased by 20 per cent in fiscal 2017, government's revenue actually decreased."

At that time, he continued, government collected approximately $700 million in revenue instead of a projected revenue of $900 miilion. Dhanpaul said government had not considered the measure would create opportunities for tobacco smuggling and people consuming more harmful alcoholic products.

He told senators he heard a rumour which he hoped was false.

"People are starting to turn to babash."

Dhanpaul disagreed with Swaratsingh that revenues from the duties would be used to improve people's health. He said information in the budget documents suggested the revenues would go directly into the Consolidated Fund for budgetary support. Dhanpaul said the higher duties did not consider the liming culture which was embedded in society.

He added while he did not smoke or drink alcohol, the duties might dampen people's Christmas and Carnival.

Vieira: No consultation with stakeholders

Later in the sitting, Vieira shared that view.

He told senators his information was there was no consultation with the relevant stakeholders before the decision was taken to increase the duties.

Vieira added many stakeholders described the increased duties coming before Christmas and Carnival as "beyond reckless."

He said, "Businesses had already placed Christmas and Carnival orders, with containers en route to Trinidad when the new rates were gazetted."

Vieira told senators the situation had created numerous problems for such businesses.

"Unforeseen additional costs. Disrupted cash flows and potential breaches of existing supply contracts."

He warned the absence of a phased implementation of the increased duties, "undermines business confidence and creates a perception of fiscal unpredictability."

Vieira expressed concern about the impact of the higher duties on tourism, Carnival and the hospitality sectors.

He said, "The Caribbean tourism economy thrives on competitive pricing."

That pricing, Vieira continued, covers products such as food, beverages and entertainment."

He said, "Stakeholders have warned that these increases could make Trinidad and Tobago one of the most expensive destinations in the region for alcohol consumption, discouraging visitors and making event tourism (Carnival, festivals, conferences) less viable."

Vieira added, "The small man is particularly affected."

He said, "The neighbourhood bars, parlours and roadside shops are integral to our social fabric."

Vieira warned the increased duties would "erode their margins, force price hikes and reduce patronage."

He said many low-income earners might become unable to enjoy a lime with alcohol.

"The cost of a beer is now $13."

Vieira said that translated into an immediate loss of purchasing power for those consumers.

Earlier in the sitting, Swaratsingh said the higher duties were the actions of a caring government led by Prime Minister Kamla Persad-Bissessar. Looking at opposition senators, he added the UNC "will do the job that for ten years, they could not do."

Swaratsingh said government was not working to make rich people richer but to uplift poor and vulnerable people.

He estimated the duties could result in a savings of $260 million in the health sector. Swaratsingh said the money could be used to benefit the population in other ways.